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Investor suits press Genzyme on buyout

By Jef Feeley
Bloomberg News / October 13, 2010

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WILMINGTON, Del. — Genzyme Corp., which spurned Sanofi Aventis SA’s $18.5 billion takeover bid, has been sued by investors who contend the biotechnology company is wrongfully depriving shareholders of the chance to profit from the offer.

Two Genzyme shareholders sued the company’s board in federal court in Boston seeking to have a judge order the largest maker of medicines for rare genetic diseases to consider Sanofi’s $69-a-share bid.

Genzyme officials have repeatedly rejected Sanofi’s overtures and urged shareholders to reject the French drug maker’s tender offer.

By failing to pursue the offers, Genzyme directors are denying investors the right “to receive maximum value for their shares,’’ lawyers for Genzyme shareholder Bernard Malina said in a lawsuit filed last month.

Officials of Cambridge, Mass.-based Genzyme contend executives of Paris-based Sanofi have indicated they would pay as much as $80 a share for the biotech company, according to a US regulatory filing yesterday.

Jean-Marc Podvin, a Sanofi spokesman, disputed that assertion, saying the drug maker had not offered a price range for its bid.

Genzyme spokesman Bo Piela declined to comment on the suits in a telephone interview yesterday.

Company officials have urged investors not to act on Sanofi’s offer until after Genzyme reviews the proposal with financial and legal advisers. Genzyme said in an Oct. 4 statement it would make its recommendation within 10 business days in a regulatory filing.

Besides the two suits filed in federal court in Boston, at least three other Genzyme shareholders have filed suit in state courts in Massachusetts over the handling of Sanofi’s offer, according to court filings.

In his Sept. 8 federal court suit, Malina asserted Sanofi’s bid provides a 38 percent premium to what Genzyme’s shares were trading when the drug maker first made the offer in late July.

Genzyme should be forced to appoint a special committee to evaluate Sanofi’s offer or shop around for other bids, William Field, a company shareholder, said in his Sept. 18 suit in federal court.

The board’s handling of the offer has denied Genzyme shareholders “a fair and adequate process for evaluating, negotiating, and obtaining the highest value reasonably available’’ for their shares, Field said in the suit.

Both Field’s and Malina’s suits are seeking class-action status.

Genzyme fell 19 cents to $72.72 in Nasdaq stock market trading. The shares have risen 28 percent so far this year.

Sanofi fell 57 cents, or more than 1 percent, to 48.86 euros in Paris trading.